Masters in Business At the Money: Deferring Capital Gains on Appreciated Equity
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Dec 4, 2024 Meb Faber, founder and chief investment officer of Cambria Investments, shares his expertise on navigating the challenges of concentrated equity positions. He introduces a groundbreaking ETF designed to help investors diversify while deferring hefty capital gains taxes. The conversation covers innovative tax strategies, including the use of 351 transactions and the advantages of ETFs over mutual funds. Listeners will gain insights into maximizing tax efficiency and enhancing after-tax returns in their portfolios.
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Diversification Advice
- Diversify concentrated stock positions, even if they have large gains.
- Consider the tax implications, but don't let them prevent diversification.
Hedging Limitations
- Traditional hedging strategies like collars and covered calls offer imperfect solutions.
- They address downside risk but don't eliminate capital gains taxes.
1031 Exchange Example
- Real estate investors have used 1031 exchanges to defer capital gains for generations.
- This involves swapping properties without triggering a taxable event.